Over the last month, shares of micro-cap biotech Agile Therapeutics (AGRX) have crashed by an alarming 55%. Following such a remarkable decline, you would think the company must be in real trouble, but not so, says one analyst.
Maxim’s Jason McCarthy argues that not only does the pullback set up an “attractive entry point,” if you take a deeper look at the company’s finances and catalysts, there’s a very attractive opportunity at play.
Although volatility currently reigns supreme across the board, since the turn of the year, AGRX has been on a unique rollercoaster ride. Less than six weeks ago, Agile’s share price was on the rise following the FDA’s approval of Twirla, the company’s contraceptive patch. As it stands, the plan to launch Twirla in Q4 still remains on track. So far, there have been no delays from manufacturing partner Corium.
Additionally, McCarthy notes, after recent measures, Agile has a very healthy balance sheet. In February, Agile secured a loan deal from Perceptive Advisors, for $35 million, which is interest free until 2023. Also last month, Agile raised an additional $48 million from equity financing.
McCarthy said, “YE-19 cash was $34.5M. Remember, that alone would have likely gotten the company through 2020. However, when we combine the loan from Perceptive, use of the ATM and the $48M in net proceeds from the 2/21 equity financing, Agile should have ~$100M in cash. With Twirla launching later this year, there should be at least 2 years of runway, possibly longer depending on the launch trajectory.”
Based on the combination of an approved drug, a strong balance sheet and favorable timelines to “weather the COVID-19 storm,” the analyst rates Agile as a “top pick in our coverage universe.”
Therefore, McCarthy reiterates a Buy rating on Agile along with a $8 price target. The implication for investors? Possible upside of a sky scraping 406%. (To watch McCarthy’s track record, click here)
The Street agrees. Agile’s Strong Buy consensus rating breaks down into solely Buy ratings – 5, in fact. The average price target comes in identical to McCarthy’s, at $8.00. (See Agile stock analysis on TipRanks)